TCS-Nielsen outsourcing deal in the eye of a storm

July 14, 2008 08:52 IST

The uproar against outsourcing work to Indian IT service providers has risen once again as Nielsen Co, the media company which signed a $1.2-billion outsourcing deal with Indian IT services provider Tata Consultancy Services last October and is facing strong criticism for announcing it, would lay off 117 workers this month at its largest global technology centre in Oldsmar, Florida. It has 1,700 employees at this facility.

The audience measurement company had received property tax breaks in 2001 to build a $100-million global technology centre in Oldsmar. They were pegged to the number of high-wage jobs - those that paid at least $52,000.

But the deal with TCS was followed by news that 117 employees would be laid off, hence Nielsen would reportedly have to forgo hundreds of dollars by way of local tax breaks. Although 50 of those workers have been hired by TCS, Nielsen recently announced it was cutting another 170 jobs.

CNN's Lou Dobbs' criticism titled "Nielsen Vs American workers" is being shown on YouTube, and generating a lot of heat. So much so that David L Calhoun, CEO, The Nielsen Company, has put up a note on his website to counter the media's "misleading picture".

It reads: "...Recently, certain local press coverage has painted a misleading picture of our company. ...Several years ago, city, county and state officials offered Nielsen a series of targeted tax incentives focused on increasing our employee base in the area and expanding the presence of our business here.

"These programs provided Nielsen with annual financial incentives if - and only if - the company made significant investments in the region and created a targeted number of new, high wage jobs in the area - not job promises but, rather, actual positions paying well above local averages. Nielsen is in 100 per cent compliance with these programs - the company has met or exceeded all requirements. We have invested nearly $130 million in building our new Center in Oldsmar, greater than twice what was required under the incentives..."

The note even defends TCS as a partner, stating: "...Following a rigorous competition among the top global firms in the field, we chose to partner with TCS, a worldwide leader in complex information technology assignments... Moreover, we are pleased to report that 50 former Nielsen employees were offered new jobs with TCS in the local area..."

Nevertheless, protests against outsourcing to India are not new. The US H-1B programme has always been under scrutiny.

And despite an over 50 per cent drop in the number of H1-B visas issued to some Indian IT firms in 2007 against 2006, US Democrat senators Richard J Durbin and Charles E Grassley had written to nine Indian companies this April, seeking detailed information on how they used the visa programme.

The letters, which come ahead of the US elections in November, are part of an effort to determine if the H-1B programme is being used for its intended purpose to fill a temporary worker shortage. The senators had written a letter on similar lines last May, too.